To: David Lawrence who wrote (10099 ) 12/3/1997 8:49:00 PM From: Glenn D. Rudolph Read Replies (1) | Respond to
Microsoft's Gates reassures bankers
Reuters Story - December 03, 1997 20:10
%BUS %ENT %BNK %FIN MSFT KEY IBM FTU BBI NB HWP V%REUTER P%RTR
By Cal Mankowski
NEW ORLEANS, Dec 3, Reuter - Microsoft Corp.
Chairman and Chief Executive Bill Gates said Wednesday his
company has no intention of getting into the banking business,
preferring instead to make money by selling technology to the
banks.
Gates also said that as the world evolves to a "Web
lifestyle," the Internet will be the medium of choice not only
for business transactions, but for leisure time activity.
He spoke via satellite hookup to a gathering of 9,500
retail bankers and others at a banking conference here.
"You decide what is on your Web site," Gates said, assuring
that in Microsoft's vision of the business, "no one is in the
middle collecting data." Some bankers have been fearful that
technology companies would "mine" mountains of data that is
generated about customers.
Microsoft is "highly motivated" to make sure banks view
the company's activities as complementary to the banking
business and not a competitive threat, Gates said. Without
providing any figures, he said the amount of revenue that
Microsoft gets from its bank customers "far exceeds" revenues
from the company's own Web sites.
Asked if Gates had indeed reassured the bankers, Patrick
Swanick, head of KeyCorp's electronic services unit,
said: "I think that's true."
Swanick said KeyCorp's relationship with Microsoft benefits
its seven million banking customers, but added that his bank
does not have an exclusive relationship with Microsoft. KeyCorp
is an equity partner in the Integrion consortium along with 17
other banks, Visa and International Business Machines
Corp.
Gates said personal computers are now in 40 percent of U.S.
households and will be in about 66 percent in a few years.
However, he said, while most banks have Web sites, only a small
percentage allow customers to transfer funds or pay bills
online.
Edward Crutchfield, chairman and chief executive of First
Union Corp. , the Charlotte, N.C., bank holding company
that is the nation's sixth-largest, suggested the banking
business has evolved to the point where "technology is the
product."
He said First Union spends $650 million a year on
technology. "We'll spend that much every year as far as the eye
can see," he said.
Crutchfield said technology has been one of the factors
driving a wave of bank mergers. He said Jacksonville,
Fla.-based Barnett Banks Inc. (, a bank with about $50
billion in assets and ranked among the nation's 25 largest, put
itself up for sale because it could not keep up with the demand
for fresh investment in technology. The acquisition of Barnett
by NationsBank Corp. is pending completion.
Crutchfield said the number of U.S. banking companies, now
more than 8,000, down from 14,000 in the 1980s, eventually will
shrink to about 2,000 as mergers continue. He said eventually
there will be "10 or 12, maybe 15 dominant financial services
companies" in the United States involved in activities that
will include brokerage services and insurance.
In a video presentation at the conference, Hewlett-Packard
showed a futuristic world in which people used devices
such as pocket telephones into which a "smart card" could be
inserted to load cash value.
Crutchfield observed that in Japan, plastic cards have
become the dominant way of paying for products in vending
machines. "Frankly, I think they're way ahead of us," he said.
